Annual Meeting 2006
The Creative Imperative
25-29 January, Davos, Switzerland
Outcomes: Annual Meeting report
From the meeting:
Annual Meeting closes with new initiatives that seize "the creative imperative"—
The World Economic Forum's Annual Meeting 2006 has closed with participants detailing new projects in disaster relief, hunger, anti-corruption, financing for development and public-private partnerships.
"I was particularly impressed by this notion of 'I will'," said Founder Klaus Schwab. "That's what the purpose of this meeting is. The Forum will provide platforms for collaborative efforts so the new initiatives or ones that have been enhanced will be implemented," he told participants in Davos.
Held under the theme "The Creative Imperative", participants used workshops and discussion groups to generate innovative solutions to global challenges. "There was a new effort to bring together people to discuss the big themes, and brainstorm action," reported Laura Tyson, Dean of the London Business School.
Peter Brabeck, Chairman and CEO of Nestlé, urged participants to take individual responsibility to act. "I think sometimes we are not translating what we are discussing in virtual terms into action which would really reflect the 'spirit of Davos'. I think the Forum is here to help us to find out what the main issues are and then it is up to us to act individually," he said. "Some of what we achieved in the trade sessions, discussing the education divide and others, we got excellent inputs to create a more balanced world," added Mukesh Ambani, Chairman and Managing Director of Reliance Industries.
The panellists agreed that the rise of the developing world is changing the balance of power. This makes it imperative that social imbalances are redressed, said James Wolfensohn, former head of the World Bank. "If we don't do that, we will not have a stable planet… and I think Davos is approaching these questions," he said.
Webcast I Session summaries
Ancient wisdom on modern questions—
People need to understand the meaning of blessing, according to David Rosen, President, International Jewish Committee for Interreligious Relations, as they often mistake conventional 'blessings' for happiness. "To truly be alive is to sense the divine. That is the true expression of life and that is true wealth," he said.
Echoing Bill Clinton's sentiments from the previous day, Matthieu Ricard of Shechen Monastery in Nepal said that all people possess an "extraordinary potential for change that we underestimate...We must cultivate basic human qualities that are common to all religions".
On the Millennium Development Goals (MDG), Archbishop of Dublin Diarmuid Martin said that "our sophisticated world is very good at setting goals but not very good at seeing them fulfilled." The MDGs "are modest goals" for our society, he said, specifically referring to the goal of halving extreme poverty and hunger by 2015. "Poverty is the inability of people to realise their God-given talents," said the Archbishop.
Webcast I Session summaries
Finding balance in the global economy—
While the global economy is growing very strongly, it could be described as "astonishingly unbalanced", said Martin Wolf, Associate Editor, Financial Times. He cited low savings and high consumption in the US, its large current account, and budget deficits as indications of the imbalances.
"Sometime in the next couple of years, an adjustment will come," said Lawrence Summers, President, Harvard University, and Annual Meeting Co-Chair. "It will require rather more policy coordination than we have seen," he commented.
"Global imbalances are deepening and that has serious consequences for developing countries like India," Palaniappan Chidambaram, India’s Minister of Finance, told participants. "The first [potential trigger] is a southward movement of the dollar; the second is an unexpected increase in US interest rates; [and the third] is spiralling energy prices [which] will lead to inflationary expectations," he explained.
John Thain, CEO of New York Stock Exchange, argued that developing countries would attract capital if they have the appropriate policies. He noted that foreign direct investment to Jordan increased sharply after it concluded a free trade agreement with the US.
Reporting on the Japanese economy, Heizo Takenaka, Minister for Internal Affairs and Communications and for the Privatization of Postal Services of Japan said the government was pursuing proactive reforms which would unlock an enormous amount of household savings and contribute to stimulating domestic demand.
Webcast I Session summary
Clinton weighs in on climate change—
Climate change is former US president Bill Clinton's gravest worry for the world today. It is the only problem "that has the power to end the march of civilization as we know it", he said, adding that there should be a "serious global effort" to promote clean energy.
Issues that "aggravate rather than promote equality" and the world's "enormous cultural and religious divides", are also serious concerns for Clinton.
Advocating public-private partnerships, he said that "the power of private citizens to do public good is greater than at any time in history" because globalization and the advent of the internet facilitate the pooling of private resources. "If we believe that there is a global society, then a lot of the work will be done by private citizens." However, he insisted that "we have an ethical obligation, not only to our own taxpayer, but to people who need [aid money] to stay alive, to make sure it is spent in the most cost effective manner" and this is where the NGO movement can make a big difference.
Webcast I Session summary
Doha moves to a new, more positive stage—
The Doha round of trade negotiations has continued in “a better mood”, said Peter Mandelson, Trade Commissioner at the European Commission. “Everyone has something to gain from these talks, everyone has something to lose if they walk away,” he reasoned at a press conference on the outcome of informal trade talks.
Mandelson then panelled a session on trade where he advocated pragmatism in handling the prickly issue of agriculture. “It took forty years of trade rounds to bring industrial tariffs down to what they are now. We can’t expect to do the same with agriculture in one round,” he said.
Celso Amorim, Minister of Foreign Relations for Brazil, pleaded the case for higher level political involvement in the trade negotiations in order to resolve the deadlock in positions between countries. “If someone chooses to care about the welfare of the poor nations, he has to take the political burden of making those decisions,” he said.
Webcast I Session summary I Press release
Take the time to set corporate strategy for success—
"The existence of strategic planning is required to ensure any long-term success," said Ralph Shrader, Chairman and CEO, Booz Allen Hamilton, during an Annual Meeting session. He stressed the importance of involving a wide range of constituencies within the organization at the beginning of the strategy process to collect input, but said that it should be executed by a small, more focused decision-making body at the top.
"Most companies have a process, but don't have a deep conversation about strategy, unless … there is a crisis," noted Gary Hamel, Visiting Professor, London Business School.
Azim Premji, Chairman, Wipro, India, said that his company has a strategy process in place, which involves intuitive choices based on judgement and what one learns from customers and employees, as well as making changes when faced with critical emerging trends.
A tough take on Tehran—
British and American officials denounced the development of Iran’s nuclear programme, but restated their commitment to finding a diplomatic solution. “The working assumption in the international community is that it is prudent to assume that Iran is seeking to develop nuclear weapons capability so they can decide whether to use them in the future,” said Jack Straw, Secretary of State for Foreign and Commonwealth Affairs, UK.
“This is a totally unacceptable situation,” said Saxby Chambliss, US Senator from Georgia.
Mahmood Sariolghalam, Professor of International Relations, National University of Iran, said the world should accept an Islamic revolutionary state, where security is a “fixation”. “As long as the West does not recognise the sovereignty of this political system I think we’re going to see a conflict,” he said.
“It is possible to do more on the diplomatic front not withstanding our frustrations,” Straw said. Iran has to provide objective guarantees that their nuclear programme is for civilian purposes only. “Foreign ministers will meet on Monday and we’ll make a judgement on the kind of resolution we will put to the International Energy Agency” at the end of the week, he said.
Webcast I Session summary
Google, Microsoft, Cisco and Skype lay out their next big thing—
The CEOs of four major technology companies discussed at an Annual Meeting session the next generation of technologies that will drive the global economy. Whether it be voice net or game learning, the panellists agreed that the digitalization of everything is changing business structures.
A second broad trend identified was the extension of the transition from transaction to interaction. People’s worlds are being transformed by the parallel transition from computing to communication via the net.
The third trend the panellists discussed was the business model that creates a product out of something that is for free, building a network of users along the way. Successful businesses are then able to add value and get users to become paying consumers. This is particularly the case with Google’s sponsored links, or peer to peer voice service, Skype, which allows users to call landlines and cell phones for a fee while users may call each other for free.
Press release I Webcast I Session summaries
Environment and the bottom line—
Faced with very real environmental risks, Annual Meeting participants sought to tackle concern for the environment as a bottom-line issue. “We know what the problems are, but how are we going to bring them down to this bottom line?" noted John Elkington, Chairman, SustainAbility, United Kingdom.
Klaus Töpfer, Executive Director, United Nations Environment Programme (UNEP), Nairobi, advocated price regulation as a possible solution, specifying that “If there is no price regulation, then you have overuse.”
Environmental standards should be linked to law enforcement because of presently insufficient accountability, according to Paul J. Ostling, Global Chief Operating Officer, Ernst & Young, United Kingdom.
Session summary I Webcasts
India and the US move from relationship to partnership—
Kamal Nath, the Minister of Commerce and Industry for India, said New Delhi's partnership with the US was based on India’s status as the world’s “fastest growing, free market democracy.” He said that the two countries shared many values but stressed the validity of India’s nuclear weapons policy, even though it may cause tensions with the US.
With regard to economic ties between the two nations, there was a consensus among participants in the session that bureaucracy within India was hindering growth. Josette Shiner, US Undersecretary for Economic, Business and Agricultural Affairs, said that “India has to deal with a bureaucracy that makes decision making too-slow-a process to keep up with the markets”.
Potential strains between the countries were raised by Strobe Talbot, President of the Brookings Institution, who said that “India needs to join the US in avoiding a crisis over Iran’s nuclear programme.”
Webcasts I Podcasts I Session summaries
Turnaround in difficult times—
Reading the warning signs before a company collapses and learning from the past topped the agenda in a session dedicated to turning a firm in difficulty around. A company that starts to miss its forecasts is a key sign, said Robert Miller, CEO of Delphi Corporation.
John Swainson, CEO of Computer Associates, noted that “the fact that forecasts are inaccurate isn’t usually just because of a faulty accounting system.” Swainson added that "the fundamental thing that determines the success or failure of a turnaround is position in the marketplace.”
The accountability of senior leadership was also highlighted as a contentious issue when companies attempt turnaround. Guy Collins, Senior Correspondent at Bloomberg TV, posed the question “should American companies separate by law the positions of CEO and Chairman?” This was broadly supported by the panel but Miller warned of the difficulties in hiring the right CEO if you didn’t also offer them the role of Chairman.
Webcasts I Podcasts I Session summaries
Roads can go a long way in fighting hunger —
Overcoming a lack of infrastructure and post-harvest losses are key to fighting hunger in Africa, according to Firmino Mucavele, Chief Executive, NEPAD Secretariat. An improved transportation system would significantly reduce the transaction costs for people in rural areas. If a country were to build sufficient roads and railways over two to three years, it would solve the problem for the next twenty years, said Mucavele.
Adequate storage facilities for food are also badly needed as 30 percent of food grown in Africa spoils or rots before it can be eaten, said Mucavele.
Anthony Burgmans, Chairman, Unilever, Netherlands, said that business needs help from NGOs and governments in order to reach the hungry who are often at the bottom of society and in rural areas. "The world is not going to accept the case for globalization if 1 billion people get stuck. It's enlightened self-interest," he said.
Obasanjo, Brown and Gates call on leaders to fund new TB plan—
Nigerian President Olusegun Obasanjo, UK Chancellor of the Exchequer Gordon Brown and Bill Gates have called on world leaders to rally behind a major new action plan to treat 50 million people and prevent 14 million tuberculosis deaths worldwide over the next ten years.
The Global Plan to Stop Tuberculosis (2006-2015) – released today by the Stop Tuberculosis Partnership, a coalition of more than 400 organizations worldwide – calls for global TB spending to triple over the next decade to increase access to TB control programmes and accelerate research on new tools to fight the disease.
The Gates Foundation pledged to triple tuberculosis funding over next decade.
Chancellor Brown called for the G8 to formally designate tuberculosis a top priority at its next meeting in July, and urged G8 member countries to pledge immediate new funding to implement the Global Plan.
Press release I Press conference webcast I Webcast I Session summary I Global Health Initiative
No impending energy crisis, say energy chiefs—
Leading energy chiefs have assured that there are adequate world energy supplies, and that the market and governing energy institutions are able to absorb energy shocks.
“There is no reason for pessimism,” declared Jeroen van der Veer, Chief Executive of Royal Dutch Shell, at a press conference devoted to energy security, during the World Economic Forum Annual Meeting taking place in Davos. “Easy oil may have peaked,” he said, but high oil prices are providing the public and private sectors with the incentive to invest in discovering alternative sources of energy which are in plentiful supply. A further step will be to find ways to cut the CO2 footprint, added van der Veer.
Diversification will alleviate pressures on world supplies, agreed Fatih Birol, Chief Economist and Head of the Economic Analysis Division at the International Energy Agency. Governments and companies will have to diversify away from oil and gas, as well as away from traditional suppliers to find new markets.
“We have the mechanisms, machinery and institutions that can respond” to oil shocks, said Daniel Yergin, Chairman of Cambridge Energy Research Associates, USA. He does not foresee an oil shock unless there is a “massive recession”.
Public-private fusion on nuclear proliferation—
The nuclear industry has a "very special role to play" and is committed to the issue of nuclear non-proliferation," said Anne Lauvergeon, Chairman of the Executive Board, Areva. "The industry is very concerned about non-proliferation and we are very involved with the International Atomic Energy Association (IAEA)," she said. "You don't need to provide nuclear cycle [weapon] technology in order to create nuclear energy for civilian use," she said, but was adamant that countries must have a "guaranteed security of supply" to meet their civilian and commercial energy needs.
On Iran's evolving nuclear capacity, Mohamed ElBaradei, Director-General, IAEA said that "we have to separate nuclear as a form of energy from nuclear as a weapon" and called on nations to provide reactors to Iran and for Iran to institute a moratorium on enrichment capacity until international confidence is restored. "Give [Iran] nuclear as power. Iran, please excercise restraint," he said.
Lauvergeon outlined the economic argument for investing in nuclear energy. It is a cheap way to produce a great quantity of electricity while being able to predict the price of electricity for the next 50-60 years. Nuclear energy does not produce CO2 emissions.
Western agricultural reform crucial for Africa's development—
Summarizing the progress made over the last year, Gordon Brown, Chancellor of the Exchequer, United Kingdom, said that “on trade, we haven’t done well, on aid, promises have been made but will they be delivered,” and that the “next stage is to move towards empowerment”.
He cited the need for statesmanship if trade talks are to be pushed forward, especially on the sensitive issue of agriculture where he specified the Common Agriculture Policy as a key issue that must be on the agenda saying that, in Europe, “ploughs have replaced guns but now we have too many ploughs.”
Paul Wolfowitz, President of the World Bank, warned that to cut poverty in half in Africa over the next 10 years would require 7% growth but added that he was optimistic that African countries were stepping up in terms of accountability, with Nigeria as a particularly good example of getting it right. This optimistic note was continued by Bono, musician, who pleaded that “African people are very entrepreneurial and we need to get out of their way.” He praised Olusegun Obasanjo, the President of Nigeria, saying that he was an inspiration for other African leaders.
Webcast I Session summary I Press release
Invest in your staff before your competition does—
The war for talent is real and companies are competing and competing for a more complex type of person, agreed participants as they discussed the difficulties of retaining staff in a globalized world. The best way to do so, argued Nandan Nilekani, CEO of Infosys Technologies Ltd, was to invest in your internal staff. He criticised the suggestion that training people meant that they would be poached away, saying that, “The more you invest in training people, the more likely it is that they will want to stay with you.”
When asked how companies should be starting staff development programs, Paul Reilly, CEO of Korn/Ferry International, suggested that, “you start with your top 10% of performers, develop them and then trickle it down through the organization.” He explained that because people are different and are motivated differently, companies had to be flexible in how they retained them.
An alternative angle was provided by Guy Ryder, General Secretary of the International Confederation of Free Trade Unions, who contrasted the business focus on gaining and retaining talent with the “190 million people in this world who are worried about gaining and retaining a job.”
Condoleezza Rice comments on Palestinian elections—
Despite the Hamas gains in the Palestinian elections, US Secretary of State Condoleezza Rice today offered her congratulations to President Abbas on peaceful elections that were "by all accounts fair". But she emphasized that the US government's position towards Hamas has not changed. "You cannot have one foot in politics and the other in terror," she said, addressing the Annual Meeting via live video satellite hook-up.
Answering questions from panellists in Davos, Rice also addressed the issue of nuclear proliferation in Iran and affirmed the US government's commitment to referring Iran to the UN Security Council for that country's moves towards developing nuclear weaponry potential. "There will be many options available to the Security Council, but we believe that that is only the start of a new phase of diplomacy," she declared.
Asked about China, Secretary Rice said Beijing must understand that it has a role to play in improving security in the region - as it has in the six-party talks on North Korea. The US has also held discussions with Chinese leaders on creating a more open political system as China's economy grows. "It is very hard to tell people to think at work but not at home," she argued.
Webcast I Press release
Annan details UN reform plan—
The United Nations Secretary-General Kofi Annan communicated his vision for a reformed UN to Annual Meeting participants. "My objective has been to persuade member states that the UN needs to engage not only with governments, but with people," he said, adding that "only if it does that, can it fulfil its vocation and be of use to humanity in the 21st century."
Annan then focused on the way that the UN is changing to focus more on human rights, saying that “within the next week or two we may see agreement on … the establishment of a more authoritative Human Rights Council, to replace the now widely discredited Commission".
The reform theme was picked up by the other participants, with actions regarding nuclear weapons being highlighted as a particular concern. “We still do not have a convention in regard to even the regulation of nuclear weapons. We need to inject a sense of urgency into the problem of weapons of mass destruction in the world,” said Jayantha Dhanapala, Senior Adviser, UN Secretariat for Coordinating the Peace Process.
Webcast I Speech: English Arabic Chinese French Russian I Session summary
Harnessing the business response to disaster—
There needs to be more predictability in the way that the private sector contributes to disaster relief efforts, believes Jan Egeland, Undersecretary-General at the UN Office for the Coordination of Humanitarian Affairs (OCHA), because “it does not help if 400 NGOs, funded by the private sector, descend on a disaster zone where they do not have the appropriate experience”.
John Allen, CEO of DHL Logistics, argued that “there has been recognition that we can make a difference…there is a huge reservoir of goodwill amongst staff, customers and suppliers". But the private sector business model is not appropriate in all circumstances, he said, adding that NGOs had different criteria for success to the private sector.
Egeland agreed that OCHA had a lot to learn from the private sector and cited its relationship with Price WaterhouseCoopers and its positive effect on their online systems. “What business can do is help us become more effective in particular areas,” he concluded.
Muslim societies ready to modernize - on their terms—
Muslim societies must be allowed to reform from within, agreed the heads of Iraq, Afghanistan, Pakistan and Jordan. “Take the time to understand the Muslim world, do not try to manipulate us because that will alienate us even more,” said Queen Rania of Jordan at a session discussing “Muslim societies in a modern world”.
“Modernization is not a bad word, it is in the heart of the Islamic religion,” said Hajim Alhasani, President of the Iraq National Assembly. “There is no conflict between modernization and Islam,” agreed Pakistan’s President Pervez Musharraf, saying they were committed to a “qualitative improvement” in the lives of all people. Hamid Karzai, President of Afghanistan, called for a “dialogue of civilizations”.
Webcast I Session summary
Cultivating responsible trade ties between China and Africa—
Africa's trade with China has nearly tripled in just five years, putting China on track to become the continent's third largest trading partner by 2006. While growing trade relations has contributed to Africa's highest GDP growth rate in over a decade, Elizabeth Economy, from the Council on Foreign Relations, warned against a "no-questions-asked" approach to investment.
As a trading partner, “China is less intrusive in domestic politics,” said Donald Kaberuka, President, African Development Bank. “For some this is a good thing, others think that a ‘no-questions-asked’ approach is not a good thing. Africa must organize itself to take advantage of Chinese investment,” he said.
“It is important that every country and company not only extract resources, but also bring best practices so something is left behind,” added Jim Kolbe, Congressman from Arizona.
Wu Jianmin, President of the China Foreign Affairs University, stressed that enhanced relations were to each other’s benefit. “China is growing fast and so we consume a lot of raw materials, energy and primary commodities and Africa has an abundance of these… and we’d like to do our part to help Africa move out of poverty,” he continued.
Musharraf outlines qualities of leadership in the wake of natural disasters—
Pakistan's President Pervez Musharraf outlined the necessary qualities of leadership following natural disasters in a special plenary address to Annual Meeting participants. "The basic ingredient of a leader, I personally feel, is that he should never panic...whatever the circumstances," he said, adding that "no nation or leader can be expected to be fully prepared to meet a major natural disaster".
President Musharraf outlined five points in crisis management of a major natural disaster:
- Take stock of the situation and assess the damage. Chart a course of action without panic or undue tension.
- Create an implementation organization.
- Select the right leaders to run that organization.
- Form an overarching strategy for meeting the challenges of the disaster.
- Generate and place adequate resources for distribution by the implementation organization.
- Moderate the effects of the natural disaster.
Theory aside, President Musharraf emphasized that a leader must reach out to the people immediately. "A leader must act immediately to show solidarity and infuse hope and confidence in the people," he said. Pakistan called a world donors conference to ask for assistance in generating necessary resources. The world community pledged USD 6.2 billion, US$ 1 billion over the estimated loss to Pakistan of US$ 5.2 billion.
Webcast I Session summary
New CEOs: Take good counsel and a deep breath—
There may be several 100-day periods in an executive's career but no job is like the top job. There is tremendous pressure in the first 100 days of running a company to make decisions and changes quickly, according to Thomas Friel of Heidrick & Struggles, and every CEO needs "unvarnished advice" from someone who has the company's interest at heart.
A new CEO should "schedule the time right away to meet people", said Solomon Trujillo of Australia's Telstra, because a CEO needs to know his organization's leaders and agenda-changers. But before accepting a company's top job, one needs to assess whether the board has the required level of skills and consensus to move forward, advised Trujillo. "It is your calling to make sure that you have the right people on the board," said Michael Useem, of Wharton School.
Stopping AIDS requires changing society—
Poverty, stigma and gender relations are the drivers of the AIDS epidemic and the fundamental factors to be addressed, according to Peter Piot, Executive Director of UNAIDS. "In the long term we have to change the norms and social behaviours that are the driving forces" of the disease, said Piot. However, he cautioned that once the debate turns in this direction "the discussion becomes very difficult", one example being that people are reluctant to discuss men having sex with men, a notion that "is a reality and we know this", he said.
Archbishop of Dublin Diarmuid Martin argued that "women can be the driving force of social change" and called for "massive investment in the education of women and addressing sexuality within that framework". Women can provide the answer provided they are supported, he said, adding that changing family relations is "difficult to do" but something that has to be done.
China's growing appetite—
The increasingly large presence of China in the global market was put into context by Zhou Xiaochuan, Governor of the People’s Bank of China. He said that “it is a good time for Chinese companies to become stronger, I think it’s still a learning stage ... there is great room for furthering corporate governance and and they need to draw in more and more global markets.” Victor Chu, Chairman of First Eastern Investment Group, echoed this notion, saying that “China’s capital market expansion is only 13 years old. We are still at the first stage of development.”
With China’s rise, however, the participants identified a need for reform in the behaviour of Chinese companies. “They must deliver a return to shareholders," said Stephen Roach, Chief Economist at Morgan Stanley. "Until now it has only been about scale.” The example of Google’s recent restrictions were cited as further evidence of this need by Edward Tian, Vice Chairmen of China Netcom Company Limited, who said that regulators "have to learn how to deal with the Internet. It’s in a very early stage in China.”
WebcastI Session summary I Press release
China's development will rely on its domestic market—
China's vice premier Zeng Peiyan outlined ambitious development plans for his country and in particular the untapped potential of China's domestic market. The size and potential of this market will make it "the basis of development", and he stressed the dual importance of environmental sustainability and self-reliance on energy sources in China's development plans.
Adding that China uses "less than one third of its hydropower" and 1.7% of its nuclear capacity, Zeng said that China will build a "stable and clean domestic energy system" and will stress the conservation of resources while strengthening environmental law enforcement.
At the same time, he underlined the importance of an international development strategy that promotes win-win results. China is willing to have open door discussions with other countries through the Forum, said Zeng. He also announced that China and the World Economic Forum had agreed that the Forum would open a representative office in Beijing. "The World Economic Forum is an excellent platform for addressing global economic issues," said Zeng.
Webcast I Press Release I Session summary
Europe's challenge is to recast its labour force—
German Chancellor Angela Merkel laid emphasis on the "social waste" in Europe's labour force, where the diversity of its labour force is being "neglected terribly" in terms of gender, age and ethnic origin. "Our society needs to entrust more tasks to thise who have something to contribute," said Merkel.
In Germany, the greatest discussion to arise within her coalition government will be on labour law and the restructuring of labour policies. The country has made strides in wage bargaining but Merkel expressed concerned that the country is not moving fast enough. "I had hoped for more than has been achieved so far," she said.
Asked about how her own values will contribute to government policy, she said that the Christian values of her Christian Democratic party have to apply to everyone. "We have to give the disadvantaged a greater share in development...If we close ourselves off, we erode our whole ethical foundation."
Webcast I Session summary
Merkel says “the creative imperative" key to prosperity—
“What kind of order do we need so that all can benefit from the fruits of the economy?” German Chancellor Angela Merkel asked more than 2,300 Annual Meeting participants in her opening address. “The Creative Imperative is the answer.”
Politicians must shape the conditions in which people can have the freedom to develop the best ideas which release the creative imperative, she said.
“There is a need for a new social market economy,” Merkel explained. “The most dignified market and social economy needs to believe in the mature citizen that can exercise responsible freedom” to translate innovative ideas into action.
Merkel told a packed plenary hall in Davos that Germany is struggling with challenges that include high unemployment. Facing these challenges requires “new priorities for political action” to reform the financial, budget, health and tax systems, she said.
Germany’s prosperity is key to Europe’s future, the German Chancellor noted. “Our target is to make Europe the most dynamic continent. But to turn the creative imperative into real innovation, that is something that we must not give up on as our future prosperity depends on it,” Merkel concluded.
Webcast I Session summary I Press release I Speech: German
The World Economic Forum chooses China as its Asia base—
The National Development and Reform Commission of the People's Republic of China and the World Economic Forum have announced that Beijing will be the location of the Forum's first office in Asia. The Forum's founder, Professor Klaus Schwab, said that China would also be the location for a Global Industry Summit working with the next generation of corporate champions.
Press release I Global Growth Companies
Big Debate sets the business agenda—
600 Annual Meeting participants voted in an interactive session on the global agenda to decide the questions that demand a 'creative imperative'. Discussions were interspersed with the results of a previously unreleased Gallup International survey of 50,000 people in 60 countries.
Participants selected the following questions as those that demand a creative imperative:
- How can China and India maintain sustainable development and manage the environment?
- What immediate steps are needed to address climate change in a changing economic landscape?
- On changing mindsets and attitudes, how can we create a global educational framework that fosters inclusivity?
- In creating future jobs, how should education systems be designed to respond to changing skills requirements?
- On regional identities and struggles: What should be done to close income disparity? How should instability in the Middle East be managed?
World leaders embrace "The Creative Imperative"—
The 36th World Economic Forum Annual Meeting in Davos has opened with calls for business, political and civil society leaders to harness creativity to provide new answers to the world’s problems.
“The assumptions, tools and frameworks that leaders have used to make decisions over the past decade appear inadequate. It is imperative for leaders of all walks of life to develop new capabilities if they expect to be successful and to maintain relevance,” said Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.
Creativity is needed to find new tools and solutions to tackle dark clouds like global imbalances, according to Mukesh Ambani, Chairman and Managing Director, Reliance Industries, India; and Co-Chair of the Annual Meeting 2006. “The world has a real chance if we form global partnerships to banish poverty and we need creative solutions. What we are going to do at the Annual Meeting is have a dialogue among the different constituents to form a partnership to create a more balanced world,” he said.
US consumer could be weakest link for 2006—
“An unbalanced world has proved more stable than predicted with higher energy prices not having a significant affect on global growth or global inflation”, said Laura Tyson, Dean at the London Business School. The participants agreed, however, that the worldwide economy would slow down over the next year, with the greatest challenges identified as faltering US consumption and China’s need to transform its growth model to one that is driven by internal demand.
Participants expressed surprise that many negative predictions for 2005 had not come true but warned against complacency in the markets. Tyson was still optimistic about the rate to which the economy would slow down. “People are predicting that gradually the US consumer will consume a little less and that will be picked up by China”, she said.
Stephen Roach, Chief Economist at Morgan Stanley, addressed the impact of oil prices on the wider economy, telling participants that “(globalization) is extremely important in changing the linkage between oil prices and other prices. The lack of a spill-over in the face of this splurge in oil prices is astonishing “.
Webcast I Session summary
Vocational training required to fill skills gap—
“What we are seeing in the US is the skills gap, where we have workers looking for jobs but also employers looking for workers”, said Elaine L. Chao, Secretary of Labor at the US department of Labor. She outlined a need for increased training in order to serve the number of new industries who are desperately seeking workers.
The nature of the globalization of jobs and its implications for forward planning were highlighted by Professor Jagdish Bhagwati of Columbia University: “Because people and companies can move around, manpower planning becomes difficult.” Professor Bhagwati also had a message for countries that were resisting the need for labour law reform. “You have to learn to redo your social protection…if companies can’t fire in Germany, they will hire somewhere else,” he said.
The participants agreed that the jobs of the future would increasingly come from the vocational sector, with a rise in face-to-face service jobs in particular. The need to convince young people of the value of vocational training was identified as paramount.
Mukesh D. Ambani, Chairman, Reliance Industries Limited, India
Peter Brabeck-Letmathe, Chairman and Chief Executive Officer, Nestlé SA, Switzerland
Martin Sorrell, Group Chief Executive, WPP Plc, United Kingdom
Lawrence H. Summers, President, Harvard University, USA